Big Things to Save Up For - How Income Insurance Can Help
Have you ever dreamt about going on a round-the-world trip, owning a business or buying that dream home?
If you’re anything like me, there’s a good chance you’re intimidated by the amount of money you would have to save to start putting your dreams into action.
A Glimpse at Big Things to Save Up for the Future
To put it into perspective, let’s consider the following examples of big things to save up for:
- Cars: When saving for a car, consider the type, model, and features you want. Budgeting for a car involves not only the purchase price but also insurance, maintenance, and fuel costs. A systematic approach to saving, such as setting aside a portion of your monthly income, can help you reach this goal.
- Homes: Whether applying for a Build-to-Order (BTO) flat or upgrading to a condo, buying a home is often the largest purchase in one’s life. It involves a significant down payment and long-term financial commitment. Start by determining the type of home you want and its approximate cost. Remember to factor in additional costs such as property taxes and home insurance in Singapore.
- Vacations: Travelling the world or taking that dream vacation requires careful planning. Determine the cost of travel, accommodation, food, and activities. How to save to travel involves setting a travel goal, budgeting monthly savings, and possibly cutting back on non-essential expenses.
- Gadgets: With technology constantly evolving, saving for the latest gadgets involves staying updated on prices and release dates. Set a savings goal based on the gadget's cost and consider setting aside a small amount each month. Flexibility in savings is key as gadget prices can fluctuate.
Saving up for big ticket purchases can seem unachievable, but it’s just about taking small steps and planning.
How to Save for Big Purchases
When planning for big things to save up for, various investment and financing options are available in Singapore to help fund your bigger purchases. Understanding these options can significantly aid in achieving your financial goals, whether buying a home, a car, or funding a dream vacation.
Investment Opportunities
- Central Provident Fund (CPF) investments: Singaporeans can use their CPF savings for investments under the CPF Investment Scheme (CPFIS). This allows them to invest in a range of products like shares, bonds, unit trusts, and Exchange Traded Funds (ETFs).
- Stocks and bonds: While stocks are associated with higher risks and volatility, bonds are generally considered safer but with lower returns. A balanced portfolio tailored to your risk tolerance and investment horizon can contribute towards your savings goals, making it an investing opportunity worth considering.
- Robo-advisors: For those seeking a hands-off approach, robo-advisors provide automated, algorithm-driven financial planning services with little to no human supervision. They are a good option for diversifying investments at a relatively low cost.
Financing Options
- Bank loans: Singapore banks offer various loan options for different needs, including personal loans, home loans, and car loans. It’s essential to compare the interest rates, repayment terms, and other fees before committing to a loan.
- HDB loans: For purchasing HDB flats, the Housing & Development Board (HDB) provides concessionary loans to eligible buyers.
- Credit cards: For smaller purchases or short-term financing, credit cards can be a quick option. Some cards offer interest-free periods or rewards. However, it is important to manage credit card debt wisely to avoid high-interest rates.
- Government schemes: The Singapore government offers schemes to support big purchases, like the Baby Bonus Scheme for new parents and grants for first-time homebuyers.
Save with Discipline, but Flexibility too.
Exploring various investment and financing options can make a difference in how quickly you can achieve your big purchases. Yet, an insurance saving plan can provide control and predictability to reduce financial stress, especially regarding the bigger things to save up for. Gro Cash Flex Pro and Gro Cash Sure are two examples of insurance savings plans that can enable you to grow your money to achieve your savings goals.
Gro Cash Flex Pro
Gro Cash Flex Pro offers a comprehensive suite of features that cater to various needs, making it a potentially attractive choice for individuals seeking a versatile insurance plan. Here's a breakdown of its key features:
- Enjoy yearly cash payouts1 from the end of the 2nd policy year
- Flexible choice of premium and policy terms
- With capital guaranteed upon maturity, get back at least all of the premiums you have paid2, excluding premiums on optional rider(s), on top of the non-guaranteed bonuses3. This applies to policies paid yearly only
Gro Cash Sure
Gro Cash Sure offers a blend of features designed to provide financial security and flexibility, making it an appealing choice for those looking to save confidently. Here's an overview of its key benefits:
- With capital guarantee4 upon the end of premium term, you will have the assurance of getting back the total premiums paid4 in the form of guaranteed cash value.
- Enjoy lifetime of cash payouts5 starting from the end of the premium term till age 120.
- Choose your premium term of 5 or 10 years based on your lifestyle and financial goals.
So how exactly can Gro Cash Flex Pro and Gro Cash Sure help you? We have here three popular goals which can be easily achieved using either of these insurance savings plans.
Organising a Round-the-world Trip
Travelling the world for a year or more is something many people dream about, but few actually achieve.
Depending on your comfort level and the destinations you choose, a ballpark figure for a year of travelling the world could be about $30,000 to $40,000, although many have done it on even less.
Saving up for a year of travel is not as hard as it looks. Let’s delve into how to save for travel with a practical and achievable approach.
For instance, imagine you’re currently 25 and hope to celebrate your 50th birthday with a round-the-world trip, and you consistently put $650/month (or $21/day) into Gro Cash Flex Pro for 10 years.
And after saving for the first 2 policy years, the plan will start paying out a yearly cash payout of $2,137, which you choose to accumulate in order to accelerate your money’s growth. By the age of 38, you’ll be able to withdraw that $70,022 needed for your big trip, while still enjoying an annual payout of $2,137, every year thereafter until you reach the age of 50.
Not too shabby for just $21/day!
Planning Ahead for a Luxury Car Purchase
Or, you’ve always dreamt of owning a luxury car priced at $190,000. You are probably wanting a savings plan that not only helps you accumulate the required amount but also offers capital guarantee.
You might consider Gro Cash Sure with a 10-year premium term, contributing S$9,500 annually. Over 10 years, your total input would be S$95,000. The capital guarantee aspect of Gro Cash Sure ensures that at the end of your premium term, you'll receive at least the total premiums paid (S$95,000) as guaranteed cash value. This amount will cover half the cost of your desired car.
Moreover, the lifetime cash payouts starting from the end of the premium term can be an ongoing source of savings, potentially aiding in financing the remaining cost of the car or covering additional expenses like insurance and maintenance.
Redesigning your Dream Home
If you’ve caught yourself browsing Pinterest for interior design inspiration, you might have been dreaming of transforming your home into your ideal abode. Saving up for a big renovation isn’t that hard when you have a plan to help get you there.
Let’s say you’ve budgeted $120,000 with which you plan to hire an interior designer and contractor, and undertake renovations in order to transform your property into your dream home.
With Income’s Gro Cash Flex Pro, you can select a premium term and a policy term according to how long you wish to save and when you wish to receive your payout in order to renovate your home.
Let’s assume you are 30 years old now and opt for a premium term of 5 years and a policy term of 10 years. You would set aside $19,179 per year for 5 years, which works out to just $53 a day. At the end of the 10-year policy term, you receive a lump sum payout of $120,000 that you can use to dramatically renovate your home (assuming that you accumulated the yearly cash payouts each year). The plan will help your money grow, so you’ll achieve your full reno budget in less time than if you relied purely on saving cash to achieve your goal.
The Not-So-Impossible Dream
Raising the money to reach your goals is not hard when you have the right tools to keep you on track with saving and that help your money grow. Reach out to our advisors for more in-depth discussion about your financial planning and how to save effectively for big purchases.
1 If the insured survives at the end of two years from the policy entry date and premiums for this policy have been paid for at least two years, you will start to receive cash payouts after the end of the 2nd policy year. The cash payout consists of a yearly cash benefit, which is 3% of your sum assured, and a non-guaranteed cash bonus, which is up to 5.40% of your sum assured (based on a 5 year premium term for a policy term till age 120 and the assumption that the Life Participating Fund earns a long-term average return of 4.25% per annum). The non-guaranteed yearly cash bonus is dependent on the premium term and policy term, and may vary according to the future performance of the Life Participating Fund. If the Life Participating Fund earns a long-term average return of 3.00% per annum, the non-guaranteed cash bonus will be up to 2.97% of the sum assured (based on a 5 year premium term for a policy term till age 120). The policyholder will receive the final yearly cash benefit and cash bonus as a lump-sum with the maturity benefit if the insured is still alive and the policy has not ended. The policy will end once this payment is made. If the sum assured of the policy is at least $80,000, the yearly cash payouts can be received in monthly payments. The amount of each monthly cash benefit payment will be worked out. The policyholder cannot change the payout frequency once the first cash benefit is paid.
2 Capital guarantee on Gro Cash Flex Pro excludes any optional rider(s), on the condition all premiums are paid, and that the policy is held until maturity date with no policy alterations or claims made during the entire policy term.
3 Bonus rates are not guaranteed and will vary according to the future performance of the Life Participating Fund.
4 At the end of the premium term, if the policyholder did not cash in this policy and all premiums for this policy have been paid for, the guaranteed cash value for this policy is equal to total premiums paid, excluding premiums paid on riders. If the policyholder choose to cash in this policy partially, the sum assured after the partial cash payout cannot be less than the minimum sum assured limit or any other amount Income Insurance may tell the policyholder about. Income Insurance will use the new sum assured and reduced regular premium amount excluding premiums paid on riders to work out the guaranteed cash value (if any) from the policy entry date.
5 If the insured survives at the end of the premium term, and if all premiums for this policy have been paid for, Income Insurance will start paying the cash benefit at the end of the premium term. Income Insurance may pay a cash bonus on top of each cash benefit, by applying a bonus rate to the sum assured, and may include any loyalty bonus payable from the end of 20th policy year after the end of premium term. Income Insurance may or may not pay this cash bonus for each policy year. Each yearly cash benefit is 2% of the sum assured and the non-guaranteed cash bonus without loyalty bonus is 7.3% of your sum assured and with loyalty bonus is 7.9% of your sum assured (based on the assumption that the Life Participating Fund earns a long-term average return of 4.25% per annum). At an illustrated investment rate of return of 3.00% per annum, the non-guaranteed cash bonus without loyalty bonus is 4% of your sum assured and with loyalty bonus is 4.35% of your sum assured.
If the sum assured of the policy is at least $80,000, the yearly cash payouts can be received in monthly payments. Please refer to the policy contract for further details.
This article is meant purely for informational purposes and does not constitute an offer, recommendation, solicitation or advise to buy or sell any product(s). It should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. Please seek independent financial advice before making any decision.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Related Product(s)
Related Articles
